DWMC: 3rd Quarter 2021 Portfolio Manager Review

Performance data quoted represents past performance and is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than original cost. Returns less than one year are not annualized. For the fund’s most recent standardized and month-end performance, please click www.advisorshares.com/etfs/dwmc.

Strategy

The AdvisorShares Dorsey Wright Micro-Cap ETF (DWMC) uses relative strength to allocate towards areas of strength in the micro-cap market. The portfolio is systematically managed and reviewed on a daily basis using the Dorsey Wright relative strength ranks. The strategy starts with the smallest 2,000 companies that trade on a US exchange; the securities are then screened for size and liquidity. The companies are each given a relative strength score and the portfolio allocates to approximately 150 – 200 companies that are in the top quartile of the rankings. Securities included are roughly equal- weighted based on the available cash at the time of purchase. This universe and the portfolio are ranked and evaluated for changes on a daily basis. Once a company’s rank fall below a preset threshold, it is removed from the portfolio and the portfolio reallocates to higher relative strength names.

Performance

The third quarter was difficult for small and micro-cap companies after a very positive start to the year, with the benchmark selling off nearly 5%. The strategy was able to largely sidestep the drawdown and was down ~0.88% for the quarter. A large part of the dispersion came in September with the benchmark down nearly 3% and the strategy up slightly, 0.26%.

Holdings

​​Top 10 Holdings

Ticker Security Description Portfolio Weight %
OPRX OPTIMIZERX CORP 1.66%
DAC DANAOS CORP 1.53%
CALX CALIX INC 1.50%
XPEL XPEL INC 1.50%
KRNT KORNIT DIGITAL LTD 1.47%
ORMP ORAMED PHARMACEUTICALS INC 1.27%
JYNT JOINT CORP/THE 1.25%
CAMT CAMTEK LTD 1.25%
IDT IDT CORP-CLASS B 1.21%
SD SANDRIDGE ENERGY INC 1.13%

As of 09.30.2021. Cash is not included.

Sector

The strategy is positioned to overweight or underweight sector allocations dependent on the relative strength of the investable universe and the portfolio allocation. The sector weight is entirely determined by the strength of the individual names in the portfolio and those that are selected based on the strategies technical buy process.

The portfolio saw a significant number of shifts this quarter as trends that have driven the portfolio through the start of the year began to break down.  Consumer Cyclicals was the largest decrease over the quarter while Financials saw the single largest increase. The decrease in Consumer Cyclicals comes in line with its underperformance this quarter and the strength or stability that Financials have shown. Overall, the portfolios small Energy exposure was the driving factor in the portfolio’s outperformance.

As of 09.30.2021.

Allocation Changes

DWMC Macro Sector Changes

As of 09.30.2021.

Respectfully,

John G. Lewis
Nasdaq Dorsey Wright
AdvisorShares Dorsey Wright Micro Cap ETF (DWMC) Portfolio Manager

 

Past Manager Commentary

 


Before investing you should carefully consider the Fund’s investment objectives, risks, charges and expenses. This and other information is in the prospectus, a copy of which may be obtained by visiting www.advisorshares.com. Please read the prospectus carefully before you invest. Foreside Fund Services, LLC, distributor.

The Fund is subject to a number of risks that may affect the value of its shares, including the possible loss of principal. Stock prices of microcap companies are significantly more volatile, and more vulnerable to adverse business and economic developments, than those of larger companies. Micro-cap stocks may also be thinly traded, making it difficult for the Fund to buy and sell them. There is no guarantee that the Fund will achieve its investment objective.

Shares are bought and sold at market price (closing price) not NAV and are not individually redeemed from the Fund. Market price returns are based on the midpoint of the bid/ask spread at 4:00 pm Eastern Time (when NAV is normally determined), and do not represent the return you would receive if you traded at other times.

Holdings and allocations are subject to risks and to change.

The views in this commentary are those of the portfolio manager and may not reflect his views on the date this material is distributed or anytime thereafter. These views are intended to assist shareholders in understanding their investments and do not constitute investment advice.